SWIFT collaborates with CSDs on post-trade DLT

Written by Chris Lemmon

16/01/2018

SWIFT and seven central securities depositories (CSDs) have signed a Memorandum of Understanding (MOU) to work together to demonstrate how distributed ledger technology (DLT) could be implemented in post-trade scenarios, such as corporate actions processing, including voting and proxy-voting.

Abu Dhabi Securities Exchange, Caja de Valores, Depósito Central de Valores, Nasdaq Market Technology AB, National Settlement Depository, SIX Securities Services and Strate Ltd are among the CSDs participating in the DLT project with SWIFT. Additional CSDs are expected to join in the coming weeks.

Securities processing currently involves extremely manual processes that often carry significant inherent cost and risk. As a part of the MOU, SWIFT and the CSDs have defined the product requirements for an e-voting solution based on DLT that includes common standards (ISO 20022) and principles.

Stephen Lindsay, head of standards at SWIFT, said: “To ensure interoperability and smooth migration, it is crucial that new technologies support existing standards such as ISO 20022. The promise of the technology on paper is great, but it is currently missing a key component around standardisation. There is clear value in re-using established business definitions and facilitating interoperability amongst DLT implementations, which this project will demonstrate.”

The group will focus on creating and adapting common standards and principles for the use of DLT amongst CSDs and the financial industry, and promoting the adoption of those standards and principles to other parties, including regulators.

Thomas Zeeb, CEO of SIX Securities Services and chairman of ISSA, said: “is a lot of potential for DLT in securities processing and the work being led by the CSD working group on DLT is tackling a key challenge related to emerging technologies, which is a clear lack of standards. As the industry evolves, DLT-specific standards such as ISO 20022, will provide a great foundation, in terms of both existing business content and approach.”

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